The windmill was built as the Drabeši Manor windmill around the mid-19th century. During the reconstruction of the windmill, a stone with the inscription "ANNO 1852" was found in the building's wall. This is likely the year the windmill was built.

The Āraiši Windmill is a so-called Dutch-type windmill, which first appeared in the territory of present-day Latvia as early as the 14th century near castles and manors. These windmills feature a rotatable "head", also known as a cap. Using a special mechanism, the mill's head could be turned into the wind while standing at the base of the mill. The mill ground flour for rye bread and animal feed, as well as produced groats.

Every year in summer — on the last Sunday of July — Āraiši Windmill celebrates Jēkabi (St. Jacob's Day) and New Rye Bread Day, when bakers from all over Latvia gather at the mill. Visitors have the opportunity to learn the master bakers' secrets, enjoy freshly brought bread, and participate in shaping small loaves. Children, together with their parents, can complete the "Loaf Trail" (Kukulīša taka), where they can learn the wisdom of bread-making by completing various tasks.